Articles Tagged ‘Employee benefits’

If We Freeze Our Pension and Move to a 401(k), How will Employees be Impacted?

Tuesday, June 28th, 2011

The impact of stopping benefit accruals in a defined benefit (DB) plan and using a defined contribution (DC) plan going forward depends on the employee’s age and years of service at the time the DB accruals stop.

For the employees within a year or two of retirement, a move to a DC plan will have very little impact because they have already earned almost their whole career’s benefit under the DB plan. However, employees still a decade or more away from retiring at the time of the DB plan freeze and who have earned ten or more years of service are often severely impacted.

Younger employees who only have a few years of service may benefit from the plan change, depending on the employer contributions to the DC plan. In fact, the DC plan will provide the younger employee with more years of investment earnings. In a good investment market, the benefits earned early in a person’s career may be the most valuable in a DC plan.

It is more difficult to predict the impact on mid-career employees. read full article »

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NYHART STUDY REVEALS AVERAGE 401(K) PARTICIPANT CAN’T AFFORD TO RETIRE UNTIL AGE OF 73

Friday, December 3rd, 2010

STUDY REVEALS AVERAGE 401(K) PARTICIPANT CAN’T AFFORD TO RETIRE UNTIL AGE OF 73

December 1, 2010 (Indianapolis) – Nyhart (www.nyhart.com), one of the
nation’s largest independent actuarial and employee benefits consulting
firms, released their _Fall 2010 401(k) Retirement Readiness Study_ today as
part of the firm’s ongoing look at the effectiveness of the traditional
401(k) retirement benefit.

The 6-month study reviewed nearly 10,000 retirement accounts from employees
at 110 public and private companies. The study evaluated how contributions
to their 401(k), the primary retirement tool for most of these employees,
would affect the age at which they could retire.

Key results in Fall 2010 401(k) Retirement Readiness Study include:
* 81% of employees 18 or older will not be able to afford to retire by the
age of 65
* The leading cause impacting employees’ ability to retire on time is
their failure to contribute enough of their income towards retirement
* Employees above the age of 55 will need to contribute more than 45% of
pay through the remainder of their career to retire by age 65. Employees
age 45-55 must contribute 19% of pay to retire by 65.
* The average participant, relying on their 401(k) as a primary retirement
vehicle, will not be able to retire until the age of 73.
* Most employees age 60-64 will likely need to work until the age of 75 to
be able to afford to retire at their current levels of contribution to
their 401(k).
* 30% of employees age 24-and-under do not participate in a 401(k)
benefit.
* 7 in 10 employees age 24-and-under are not expected to retire by age
65.
read full article »

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